Abbott Labs (ABT) recently announced its intention to pull obesity drug Meridia from the US market. Abbott Labs’ decision was based on a request made by the US Food and Drug Administration (FDA).

 

The FDA’s request was based on data from a post-marketing study (SCOUT – Sibutramine Cardiovascular OUTcome Trial), which showed that patients treated with Meridia experienced a 16% increase in the risk of cardiovascular events (non-fatal heart attack/stroke, the need to be resuscitated once the heart has stopped, and death) compared to placebo. Results also showed that the difference in weight loss between the Meridia and placebo arms was small.

 

In mid-Sep 2010, the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee had conducted a meeting to review the drug. While 8 panelists were in favor of removing the obesity drug from the market due to the unnecessary cardiovascular risks associated with its use, an equal number of panelists recommended the implementation of stricter labeling and risk management programs.

 

Abbott Labs is currently in discussions with regulatory authorities in other countries where Meridia is available. We believe Abbott Labs will withdraw the obesity drug from these markets as well. We note that Meridia was withdrawn from the EU in Jan 2010.

 

Obesity Drugs Under FDA Watch

 

Obesity drugs have been under the FDA scanner for a while. Earlier this year, the FDA had issued a warning regarding the possibility of rare cases of liver injury occurring with the use of weight loss drugs Xenical and Alli. While Roche’s (RHHBY) Xenical is available only by prescription, GlaxoSmithKline’s (GSK) Alli is available as an over-the-counter (OTC) medicine. Both Xenical and Alli contain the same active ingredient, orlistat, albeit in different strengths.

 

The agency has also exercised caution while reviewing applications for new obesity drugs. Companies like Vivus (VVUS), Orexigen Therapeutics (OREX) and Arena Pharmaceuticals (ARNA) are all seeking approval for their obesity candidates. However, both Vivus and Arena Pharma received negative recommendations from the FDA’s advisory panel regarding the approvability of their obesity candidates. A final response from the FDA on both candidates is due later this month. Meanwhile, a response on Orexigen’s Contrave will be out by Jan 2011.

 

Neutral on Abbott Labs

 

We currently have a Neutral recommendation on Abbott Labs, which is supported by a Zacks #3 Rank (short-term Hold rating). With Meridia not being a major contributor to revenues, we do not expect the withdrawal of the drug to impact Abbott Labs’ financial performance.

 
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